What is SOPA? And is it as bad as everyone says it is? Part 3

Critics have numerous complaints about SOPA. Here’s one that is designed to scare the daylights out of you:

Holy Festivus! The United States is the next China, Iran and Syria!

Here are a few of the complaints:

1. It will require deep packet inspectionThe exact requirements will depend on what the removal order says. The Recording Industry Association of America says that SOPA could be used to force Internet providers to block by "Internet Protocol address" and deny "access to only the illegal part of the site." It would come as no surprise if copyright holders suggested wording to the Justice Department, which would in turn seek a judge’s signature on the removal order.

Deep packet inspection, meaning forcing an Internet provider to intercept and analyze customers’ Web traffic, is the only way to block access to specific URLs.

Deep Packet Inspection, or DPI, is anathema to Internet privacy advocates because it means that ISPs or network operators can take a look inside the Internet packets and make decisions about how to route the traffic. This is considered intrusive because an ISP can give users a degraded experience if they do things that aren’t in their own financial interests (e.g., if NBC owns Comcast, then they might route a user over a slower pipe if they view TV shows on abc.com).

DPI is not required, at least not in this case. URL/host resolution is required for every single Internet transaction when you are browsing the web. The only way for you to browse to a web page is for your ISP to convert URLs to IP addresses. Thus, if the ISP were to block your access to the IP, they don’t have to do anything more intrusive than they are already doing, they only need to make the decision to not resolve it and instead return an error or redirect you to another web page. Comcast does this if your computer is contacting C&C’s and they don’t use DPI.

This complaint is spurious.

2. It will cost the economy jobs

This argument says that entrepreneurs who try to start up web-based businesses will have to invest piles of money up front to deal with legal fees (to combat continual lawsuits) from plaintiffs who claim that they are infringing on their intellectual property. Because of the increase in possible legal feeds, people will not bother creating Internet companies. It just isn’t worth the effort. If you check out the Wikipedia article, there are a bunch of quotes from people who claim that it will hurt Internet commerce. Says Gary Shapiro, CEO of the Consumer Electronics Association, “The result will be more lawsuits, decreased venture capital investment, and fewer new jobs.”

The problem with saying that Legislation X will cost more jobs is that people are very poor at predicting the economic results of their actions. Even economists don’t do a very good job. No matter what happens, there is alwayssomebody claiming that it will result in the end of the world and it doesn’t matter what side of the aisle you are on. For example, people on the political right claim that higher regulations and taxes stifle the economy and put unnecessary burdens on businesses. As a result, more taxes and regulations are bad. Yet in the 1990’s for example, when the Glass-Steagall Act was in place, businesses did just fine. Similarly, studies done of countries with higher tax rates and lower tax rates (US, France, other European countries – see Ken Fisher’s book Debunkery) do not materially affect stock market returns.

On the other hand, people on the left flipped out (they got angrier than an environmentalist who sees an SUV with one driver) when they discovered that the NSA was intercepting phone calls to people in the US without a warrant. To them, this signaled that the US government was soon to turn on its own citizens and clamp down on individual rights. Of course, that never happened and the program was very contained (the NSA was too busy working on an industrial piece of mal—um, never mind).

Whether you agree with my political and economic statements or not, the fact is that we aren’t very good at predicting the economic implications of this legislation. You could argue that this will divert startups away from even bothering to try. But you could also argue that new startups will arise whose sole purpose it is to assist companies with compliance of this new legislation. In which case, this legislation will create new jobs! Which one is correct? Nobody knows, and that’s my point.